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Integration challenges ahead for Perspecta and SAIC as federal sector IT services vendors position for the rest of 2019

Publishing this week from TBR’s federal IT research program
are our initial assessments of SAIC’s and Perspecta’s 1Q19 earnings
performances. Perspecta is wrapping up its first complete fiscal year as an
independent business entity. Its inaugural year has been characterized by
significant challenges integrating a trio of large-scale legacy federal IT
competitors, and we expect this will be reflected in its fiscal performance for
1Q19 and its FY19. The company won major contract extensions and successful
re-compete bids to close out its FY19, setting the stage for improved
performance in an increasingly growth-friendly federal IT market in its FY20.

SAIC will fully integrate Engility and its nearly $1.9
billion in revenue and 7,500 employees during the year, finishing a process
that started in 1Q19. SAIC will leverage Engility to further accelerate its
expansion with a more balanced, diversified and de-risked portfolio and an
enhanced competitive stance in markets (space and intelligence) adjacent to its
core Department of Defense and federal civilian sectors.

Read more of Senior Analyst John Caucis’ assessment of federal IT services vendors through the quarter and the upcoming
quarterly benchmark.

Additional assessments publishing this week from our analyst teams

Wednesday

Salesforce continues to expand its global
reach with new infrastructure investments and local partnerships in key
regions. These developments, alongside ongoing improvements to its core
portfolio in recent quarters, will enable Salesforce to deliver $3.68 billion
in revenue for CY1Q19, according to TBR estimates. — Jack McElwee, Analyst

Thursday

TBR’s 1Q19 Cisco report explores how
Cisco sustained revenue growth momentum in 1Q19 despite a significant slowdown
in its Service Provider customer segment, where communication service providers
are focusing much of their investment on the RAN layer and software-defined
networking is causing disruption. Outside the service provider segment,
however, Cisco’s refreshed product lines and strong brand are resonating across
SMBs, large enterprises and public sector organizations. Cisco completed the
refresh of its enterprise switching lineup with the introduction of the latest
Catalyst product in 1Q19, which will help drive continued growth across
non-service provider segments. — Michael Soper, Senior Analyst

Cisco Customer Experience’s use of partners to develop its
portfolio around analytics, IoT and security as well as supplement delivery enables the company to
maintain profitability and generate growth, as highlighted in TBR’s 1Q19
coverage of the company. Its pursuit of partnerships with technology-led vendors, including Microsoft Azure, Amazon Web Services
and Google Cloud, will help Cisco Customer Experience generate additional
advisory, implementation, and software and solutions support engagements. — Kelly Lesiczka, Analyst

And sign up here for
the next TBR webinar, The Makings of the Telecom Edge Compute Market.

Strong investments by webscales and China-based telcos will carry the telecom infrastructure services (TIS) market through the COVID-19 crisis relatively intact, with a shallow decline of relatively short duration expected in the overall market followed by a robust, sustained recovery as CSPs in other key countries accelerate their infrastructure initiatives to align with the new […]

Strong investments by webscales and China-based telcos will carry the telecom infrastructure services (TIS) market through the COVID-19 crisis relatively intact, with a shallow decline of relatively short duration expected in the overall market followed by a robust, sustained recovery as CSPs in other key countries accelerate their infrastructure initiatives to align with the new […]